What is a Key Performance Indicator? KPI's in simple terms

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21/09/2021
2 min read

What are Key Performance Indicators, and how are they used?

Once you have established your business goals, it's a good time to start thinking about how you will measure the performance of your digital marketing campaign.

To do this, we use Key Performance Indicators.

A KPI is a quantifiable measure of performance over time for a specific objective. KPIs provide targets for your business progress, milestones, and insights that assist you in measuring success and making important decisions for your company.

In short - A KPI is the value used to track the progress of your business goal.

There are KPIs for every aspect of business, whether it's financial, marketing, sales, or operational. We look at the defined business goals and decide the metrics which will give us the best insights. We recommend that you create a spreadsheet or table with each of your business goals listed, the KPI for each of these goals and an area to add the value each month for ongoing comparison.

For Example;

GoalTarget KPIJanuaryFebruary
Increase Website Traffic1000 Visitors per month748 Visits1089 Visits

Tips for deciding your Key Performance Indicators

  • A quantitative KPI relies on numbers to gauge progress, for example, "1000 leads to be generated every month"

    A qualitative KPI looks at opinion or feeling-based data, for example, positive reviews or consumer attitude towards your brand.

    Both types of metric are important for tracking the overall performance, so be sure to choose the right approach for each of your business goals.

  • This process shouldn't be overcomplicated or be too laborious. Focus on insights that will provide you with actionable data to improve performance and provide a return on investment. For example, focusing on the number of likes on a Facebook page is great. However, you may be better served to monitor the success of a Facebook post by using Google Analytics to track how many visits from Facebook your website received.

  • Do not focus exclusively on obvious marketing metrics such as website visitors, sales or social media. Your customer service and operational metrics are just as important, so be sure to keep a check on internal processes also.

Think carefully about your KPIs and be sure to evaluate them over time, introducing new metrics as needed to monitor new activities. Once you have established the metrics you will be using, you can move on to get a baseline reading of your current performance.

 

KPI Baseline Reading

Now that we know how we're going to measure the performance and effectiveness of our marketing efforts, let's take a baseline reading of our current position.

It's important to have a grasp of how we are currently performing to guage improvement over time. Use the spreadsheet or table you have created to complete a baseline column.

GoalTarget KPIBaselineJanuaryFebruary
Increase Website Traffic1000 Visitors per month598 VisitsTBCTBC

Once you have recorded all of the data for your current position, you will have a clear idea of where to focus your efforts for improvements and where you are currently performing well. This will allow you to assess any current marketing methods to evaluate where change is needed and what can be learned from successful metrics.

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